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Entrepreneurship
for Bottom Billions
Diju Raha & Sorin Cohn
2010 Asia Business ConferenceDuke Fuqua School of Business
February 2010
24 February 2010
Agenda
Introduction (Diju Raha):
Disruptive Innovation &
Entrepreneurship for Bottom Billions
Opportunities (Sorin Cohn):
Cellphone as Antipoverty Vaccine –
Research Projects on Business Issues
Discussions (All)
p. 2 Connected Opportunities Proprietary
24 February 2010
Status of Bottom Billions
Despite $2.5 Trillion in aid since 1950
Billions of people below $1/day poverty level
High level of illiteracy
The Millennium Declaration - 9 years afterwards…
More than 70 countries in need of fundamental socio-economic
re-structuring
Demands Disruptive Innovation
p. 3 Connected Opportunities Proprietary
24 February 2010
Disruptive Innovation
A radical departure from current thinking
A quantum jump from status quo
Establishes new platforms with significant impacts:
Technology
Economic
Social
Leadership (industrial, political, etc)
Major examples from the past and present:
The Green Revolution
The Growth-through-Outsourcing Upheaval
The Nano Disruption (in progress)
The Children’s Machine (in progress?)
p. 4 Connected Opportunities Proprietary
24 February 2010
Disruptive Innovation in Agriculture
69 years ago Mexico Agriculture research organization requested a research grant to improve yield of wheat and maize in Mexico
Grant application was rejected
US. VP. Henry Wallace and Nelson Rockefeller intervened: a small research grant was approved by Rockefeller foundation mainly to avoid communist infiltration and protect Rockefeller investments
Research proved very successful.
20 years later Ford foundation and later US aid and later still World Bank joined to sign a major philanthropic project known as “Green Revolution”.
The “Green Revolution” under the stewardship Dr. Norman Borlaugh helped avoid widespread famine in India, china in 60’s.
Initial philanthropic investment in Agriculture Research saved millions of people from starvation, poverty and spun off Multi Billion Dollar Agriculture Industry.
24 February 2010
Disruptive innovation in Agriculture
Norman Borlaug signing the guest book at the Nobel Peace Center in September 2006. Behind him is Geir Lundestad, Director of the Norwegian Nobel Institute.
24 February 2010
Disruptive Innovation: Outsourcing Overseas
Conclusion: Enrich the Talent Pool
Nortel must GLOBALIZE
Late 1970’s:
Nortel hiring top
10% of engineering
grads
1989:
Nortel hiring
90% of
engineering grads
Growth goal (Nortel):
0
10
20
30
Re
ve
nu
e (
Bil
US
$)
1989 2000
Fewer science & tech grads in US
& Canada
1986:
2000:
24 February 2010
Disruptive Innovation: India Barriers in 1989
… but if the roads are paved, the Gold Rush is over!
Distance
management
Quality & on-time delivery
Subject matter
expertise
Cross-cultural
understanding
Acceptance of concept by
organization
COCOM
Visas
to Canada
& US
Communication
Focus on simplybody-
shopping
24 February 2010
Disruptive Innovation: challenges with telecom connectivity in India
Highly restrictive telecom regulations
No undersea cables; Scare satellite channels
No high-speed telecom equipment
Earth stations not maintained
Only one telecom carrier… controlled by the Central
Government
24 February 2010
Communications makes barriers fall
Communications
Distance
management
Quality & on-time delivery
Subject matter
expertise
Focus on simply
body-shoppingAcceptance of
concept by organization
COCOM
Visas
to Canada
& US
Barriers fall: Nortel is the catalyst
Nortel invested millions of dollar upfront, saved millions, engaged best and brightest Indian Minds for R&D.
$100M body-shoppingIndian IT industry was transformed to work-from-India
Is now worth $36B… and growing!
through Nortel initiatives
–Ottawa Citizen, 3/12/01
24 February 2010
Disruptive Innovation in Auto Industry
A car for bottom millions at the price of one lakh Indian Rupees or $2000 US
Initiative was launched by India’s Tata motor not by established global auto giants.
A team of 500 engineers of Tata Motors in India rigorously designed the lowest cost production car in 2009.
Cost target of $2000 US was met
Mileage: 61MPG Hwy and 52 MPG in city driving.
Commercial launch May 2009 203,000 sold to date.
Indian auto maker, the game changer showed the global auto giants how the game has to be played and in the process is shaking the global auto industry
24 February 2010
24 February 2010
Disruptive Innovation in Computers
The $100 Laptop or Children's Machine is an inexpensive subnotebookcomputer intended to be distributed to children in developing countries
The laptop is developed by the One Laptop per Child (OLPC) non-profit organization and manufactured by Quanta Computer
The subnotebooks are designed for sale to government-education systems which then give each primary school child their own laptop
Pricing was set to start at $188 in 2006 with a stated goal to reach the $100 mark in 2008
The first early prototype was unveiled by the project's founder Nicholas Negroponte and then-United Nations General Secretary Kofi Annan on November 19, 2005 at the World Summit on the Information Society(WSIS) in Tunis, Tunisia
In late 2008, the NYC Department of Education began a project to purchase large numbers of XO computers for use by New York schoolchildren
Wikipedia: http://en.wikipedia.org/wiki/The_Children’s_Machine
24 February 2010
The Children’s Machine
24 February 2010
Disruptive Innovation for Bottom Billions
And, what about the cellphone?
Connected Opportunities Proprietaryp. 16
The Cellphone Growth
Home-grown mobile operators in China, India, Africa and the Middle East
China’s two leading low cost telecoms-equipment-makers, Huawei and ZTE
Prepaid billing systems, allowing people to load up their phones with credit
Basic handset cost decline from $250 in 1997 to around $20 today
Mobile data services growth: In rich countries for multi-media entertainment and gaming In poor countries more interest in instruction, health care and money transfer
24 February 2010
Cellphone Potential: Bottom-up Examples
Globally micro-entrepreneurs account for 50-60% of all businesses, and in Africa nearly 90%,
With mobile phones, basic activities such as stock handling and negotiating prices become much more efficient
Some examples:
1. Porters, carpenters and other self-employed workers advertise their services on lamp-posts and notice boards and ask potential clients to get in touch with them
2. A roadside kiosk in Nairobi selling underwear and ice cream, increased income by 70% in six months after using a mobile phone in 2006
3. Fishermen in Kerala with mobile phone calls several markets while still at sea before deciding where to sell which eliminated waste, dramatically reduced the variation in prices along the coast, brought down consumer prices by 4% and increased fishermen’s profits by 8%. Mobile phones paid for themselves within two months
Mobile phones unlock entrepreneurship
24 February 2010
Cellphone Social Change Examples
Election monitoring in countries like Nigeria, Kenya and Sierra Leone:
Reporting vote totals by phone from polling stations to local radio stations makes it harder to fiddle the results later.
Cellphone SMS to co-ordinate and report political protests in many countries
Mobile phones used to root out corruption in more direct ways.
Zubair Bhatti, a Pakistani bureaucrat, asked all clerks in the Jhang district who handled land transfers to submit a daily list of transactions, giving the amount paid and the mobile-phone numbers of the buyer and the seller.
He explained that he would be calling buyers and sellers at random to find out whether they had been asked to pay any extra bribes or commissions.
When charges were subsequently brought against a clerk who had asked for a bribe, the others realized that Mr Bhatti meant business
Jhang model, as it is now known, is being adopted in other districts. “It could easily be institutionalized with a call centre”
Mobile phones empower people economically and socially,
and enable “civil society”
24 February 2010
Cellphone Potential for Disruptive Innovation
How can YOU participate in the business evolution and spread of cellphone services to
bring entrepreneurial economical benefits and social changes to the bottom billions?
“When you get a mobile phone it is
almost like having a card to get out
of poverty in a couple of years.”
Muhammad Yunus,
2006 Nobel Peace Prize
Grameen Bank in Bangladesh
24 February 2010
Agenda - 2
Introduction (Diju Raha): Disruptive Innovation &
Entrepreneurship for Bottom Billions
Opportunities (Sorin Cohn):
Cellphone as Antipoverty Vaccine
Challenges
Planning for Connected Opportunities Revolution (Disruptive Innovation Paradigm Shift)
Research Projects on Business Issues
Discussions (All)
p. 21 Connected Opportunities Proprietary
24 February 2010
Cellphone Socio-Economic Impacts
Location-Independent Access to Just-in-Time “Services”
Cellphone changed the affluent societies behaviour: the way we
interact, work and play
Increased the GDP of every nation
Increased the producitivity of every class of users from bankers to
bakers to rickshaw pullers in the third world cities
Making cellphone services available to bottom billions will:
Be a quantum step in alleviating poverty depravation
Give voice to the voiceless and
Open up unprecedented opportunities
p. 22 Connected Opportunities Proprietary
24 February 2010
Citizen Services & the Bottom Billions
Citizen Services Platform
c-WorkMart c-
Financial
c-Justice
c-Health
c-Education
c-Safety
c-Social
c-Pension
c-Disaster
p. 23 Connected Opportunities Proprietary
Massively affordable just-in-time “citizen services”
for self-empowerment out of poverty
24 February 2010
Technology Imperatives & Challenges
Services Paradigm Shift
Anywhere & Anytime: Cellular Empowerment
“Citizen Services” for the largely illiterate bottom billions
Key Imperatives for Massive Adoption
“Citizen Services” Services Platform
Anywhere & Anytime Affordable Network Access
Bottom Billions Affordable User Terminals
Illiterate population Appropriate User Interfaces
National/Regional adaptability Socio-Political Challenges
Technology largely exists for pilot programs…
Needs evolution for massive accessibility & affordability
p. 24 Connected Opportunities Proprietary
24 February 2010
Services Platform Challenges
Capacity for (tens and hundreds of) millions of users
High speed
Security & personal identification
Local service adaptability
Easy development and deployment of targeted
services
Interfaces to Government/Agencies’ Systems &
Services
Iconic interaction
p. 25 Connected Opportunities Proprietary
24 February 2010
Network Infrastructure Challenges
Capacity for hundreds of millions of users
Variety of services
User localization capabilities
Affordable & power thrifty for sparse remote locations
Local non-grid power for remote base stations (10% present)
Low operating expenses
Ruggedized & self-deployable (almost) base stations
Facilities for local entrepreneurship
p. 26 Connected Opportunities Proprietary
24 February 2010
Personal Devices Challenges
Rugged (shock, waterproof, dirt, etc…)
Affordable
Appropriate power modalities (solar, dynamo, etc…)
Appropriate service interfaces
Iconic ( with potential iconic audible transcription)
Language choice - translation (possibly Services Platform)
Localization
User-identification capabilities
A market of a few billion users warrants such devices… eventually.
But it needs a jump start to shorten its development!
p. 27 Connected Opportunities Proprietary
24 February 2010
Economic, Social and Political Challenges
Bottom billions are too poor to be treated as consumers
Traditional aid emphasized survival rather than self-
empowerment
Governance failure
Paucity of public services & impaired access to them
Obstacles to private initiative development
Monetization of cell-minutes Cell-minute Bank
There are local, bottom-up trials of services that help some poor
but no concerted effort to empower the bottom billions
p. 28 Connected Opportunities Proprietary
24 February 2010
Agenda
The Cellphone and the Bottom Billions
Challenges
Planning for Connected Opportunities Revolution
(Disruptive Innovation Paradigm Shift)
p. 29 Connected Opportunities Proprietary
24 February 2010
Jump Starting the Process
Provision of meaningful and cost effective services to
the huge, dispersed and diverse markets characteristic
for poverty stricken regions requires a departure from
traditional ways to deploy viable services:
Paradigm Shift:
From communication tool for the rich into a tool for economic emancipation and social improvement for the poor
From “parachuted” aid to catalyzing self-improvement and entrepreneurship
From commercial services to Citizen Services
From generic to personal and localized services
p. 30 Connected Opportunities Proprietary
24 February 2010
Comprehensive Concerted Undertaking
USERS
Governments-National &
Local
NGOs & International
Agencies
Financial Institutions
Operators & Service
Providers
Technology Vendors
p. 31 Connected Opportunities Proprietary
24 February 2010
Citizen c-Services Imperatives
Local Priority
Services designed with local authorities
for local needs
Not a simple transplant of developed
world services
Coupling with Government/Agency Resources
Conducive to Self-Empowerment & Entrepreneurship
Personal Identification & Localization
Effective Monitoring and Feedback Means
Adaptability to Other Regions
p. 32 Connected Opportunities Proprietary
24 February 2010
Managed phased development
Core Concept
Feasibility
Engagement
Pilots & Proof of Concept
Transfer & Global Replication
Core Organization to initiate, manage and ensure consistency
Pilot(s) & Proof of Concept
Engagement
Feasibility
Phase Development and Deployment
CoreConcept
Concept & Strategy
Funding & Key Players
PlanningResources
Management
Political / Government
Financial
Social
Network & Service
Platform
Personal Devices
Services & Interactions
Foundations & Financial Institutions
Governments
Operators & Service
Providers
Technology Vendors
Core Funding
Lab Design &
Trials
The Cell-Minute Bank
Pilot(s) Funding
Network Coverage
Usable Handsets
Services Platform
Citizen Services
Government & Social Agencies
Operators Service
Providers
Network Infrastructure
Personal Devices
Citizen Services
p. 33 Connected Opportunities Proprietary
Transfer & Global Replication)
Pilot(s) & Proof of Concept
Engagement
Feasibility
CoreConcept
24 February 2010
Research Project Opportunities at Fuqua
Connected Opportunities Proprietaryp. 34
1. Constructive commitment of government aid agencies and philanthropies e.g. CIDA US AID, UN, ADB, Rockefeller, Ford foundation and others.
2. Creation of a cellphone “minutes bank” where currency is the cellphone minute
3. National regulatory issues & effective commitment of local governments
4. Economic deployment of networks in low density remote locations
5. Low cost wireless phones for illiterates – possibly icon based
6. Citizen Services: platform and tunable service opportunities with Cellular Service providers
7. Localization and User Identification as a civic or business service
8. …
24 February 2010
Agenda - 3
Introduction (Diju Raha): Disruptive Innovation &
Entrepreneurship for Bottom Billions
Opportunities (Sorin Cohn): Cellphone as Antipoverty
Vaccine
Discussions (All)
p. 35 Connected Opportunities Proprietary
24 February 2010
Connected Opportunities Revolution
There was the “Green Revolution” in the 2nd half of the
20th century to eliminate famine
There will be the “Connected Opportunities Revolution”
in the 1st half of the 21st century to eradicate poverty
Networks = fields
Cellphones = tools
Free minutes = seeds
Citizen services = irrigation systems
p. 36 Connected Opportunities Proprietary
VISION IS THE ARTOF SEEING THINGS
INVISIBLE
Thank YouDiju Raha & Sorin Cohn
